RE:How Buffett winsGotta be honest with you, it's hard to read anything you post at this point. I know from what place it comes from. Bashing and shorting. What other stocks are you invested in?
Tater78 wrote: Let’s Imagine that there are only 2 outcomes for HCG. The first is bankruptcy and the second is the business reverts back to what it was in the past. Let’s examine the return to WB in these 2 scenarios.
In bankruptcy, which we will estimate occurs in 18 months, WB loses the 400mio equity investment and loses the 2bio fronted under the loan. He earns 270mio in interest and ends up with 5.8bio in mortgages. Assume those mortgages pay off at 90%, his profit is 3.09bio, on an investment of 2.4bio. That’s a 110% return or 65% CAGR. That’s not bad.
Assume that HCG survives. This year is going to be a struggle to turn a profit, but let’s say next year they get EPS to $2.5 per share. From there they grow it at 10% per year, for 5 years and it then settles to 5% in perpetuity. Also assume a P/E of 18. WB will make his 3bio in profit by 2027, for a CAGR of 27%.
So, Buffet wins in either case. But, he wins faster if they go bankrupt. This is the structure he chose. It’s different than what he did with BAC and GS. In both of those deals, he did best if the companies survived and thrived.